posted at 2:40 pm on July 7, 2011 by Tina Korbe

The president and congressional leaders met this morning at the White House to discuss ways to reduce the deficit — and House Speaker John Boehner (R-Ohio) says there’s a 50/50 chance a debt limit deal will be reached in 48 hours — but just what the meeting accomplished is not yet clear.

Prior to the meeting, Republicans sent seemingly mixed signals about whether they would be open to “revenue increases” — a term all too often used as a euphemism for tax hikes.

Of course, tax hikes aren’t the only way to raise revenues, and Kyl, especially, promotes the sale of government lands as an alternative to tax increases. He has also proposed increased fees for government services. Cantor has suggested a sort of tax compromise, saying Republicans would agree to close certain tax loopholes as long as those loopholes were offset by tax cuts elsewhere.

These comments make it hard for me to not be cynical about the result of the deficit reduction meetings. How much you want to bet they will net moderate cuts and the least controversial revenue raisers the Republicans can muster, but no more? Procedural reforms — those most important to ensure the country doesn’t run up against the debt ceiling issue again and again — will likely be lost in the shuffle, leaving principled conservatives in Congress with little choice other than to vote against a deal that will ultimately pass. After all, the closer we’ve gotten to the debt ceiling deadline, the less the key players seem to talk about anything other than cuts and revenues. Very few have continued to talk about the debt ceiling itself and, to my knowledge, no Democrats have yet signed on to “Cut, Cap and Balance,” nor have they proposed procedural reforms of their own. (Please somebody tell me if I’m missing something here — I’d love to find out I’m wrong on this!)

In the interest of staying positive, though, I’m going to reflect back on Sen. Ron Johnson’s comments on a conference call this morning and Rush Limbaugh’s impassioned remarks on the subject on his show today (more on that shortly). Too bad neither of them were in the meeting at the White House.

Update: The president issued a brief statement at the end of this morning’s meeting to say nothing has been agreed to and talks will continue through the weekend. Whoop-de-do.

Update: Kyl’s office responded to my story, concerned that this post makes it sound as though Kyl said Republicans agreed to tax increases (as Reuters and others wrongly tweeted). I thought I made it clear the revenue increases Kyl was referring to were land sales and government service fee increases, but just to be sure there’s no confusion about what he actually said, here are his on-the-floor remarks, posted at Breitbart TV.

Of course, I’m far more OK with the revenue increases Kyl’s talking about than I am with tax hikes, but it doesn’t change that I’m disheartened by all the discussion of revenues, in general. I’d rather Republican leadership put Obama on the defensive for not more seriously and publicly discussing procedural reforms like statutory spending caps.

Update: Yet more information from Kyl’s office. These discussions in which Republicans said they’d consider certain kinds of revenue increases — the discussions to which Kyl was referring and to which I was responding — actually occurred during the now-defunct Biden talks.

“What the GOP tentatively agreed to was as part of the failed and now-defunct Biden debt discussions – not part of any current [discussion] between Obama, Boehner and McConnell,” Kyl’s spokesman explains. “Also, the Reuters story you link to suggests that an agreement or deal has been struck. That, too, is not correct.”

In other words, when Reuters reported Republicans had agreed to revenue increases, the wire service was reporting old pseudo-news (i.e. the “news” that, during the Biden talks, GOPers tentatively agreed to certain kinds of revenue increases) and making it sound fresh. I’ve delinked this piece from the misleading Reuters report. I also changed the homepage excerpt to “Reuters takes Kyl’s comments out of context.”

Where’s the projections for the increased revenues from pro growth changes in government policy?

If the Dems can get away with total BS on their projections, Conservatives should have no problem selling valid economic forecasts from debt, tax and regulatory reductions, especially when itemized and explained in plain talk.

Of course, tax hikes aren’t the only way to raise revenues, and Kyl, especially, promotes the sale of government lands as an alternative to tax increases.

Kyl is saying this mainly to dispel the myth that Republicans aren’t willing to compromise on increasing government revenues. He’s saying that tax hikes are still off the table but that sale of government lands or hikes in user fees would be acceptable:

Why does everyone keep acting like ending corporate welfare/loopholes is a tax increase?
therightwinger on July 7, 2011 at 2:43 PM

Because “corporate welfare/loopholes” is mostly a leftist fantasy. We shouldn’t even have a corporate profit tax to begin with. Get rid of that tax, and poof, no more “corporate welfare”. The reason that there is a special tax rate for dividends is that they are effectively double taxed. Get rid of the profit tax, and we can make dividends part of regular income.

Well I understand what they mean by Revenue enhancements. if they are talking about selling unused US land and buildings Great why are they sitting on them anyway. But the Reps had better NOT raise Taxes on ANYONE. I am not rich but I dont hate them, I envy them, but I wont ROB them.

Why does everyone keep acting like ending corporate welfare/loopholes is a tax increase?
therightwinger on July 7, 2011 at 2:43 PM

Because “corporate welfare/loopholes” is mostly a leftist fantasy. We shouldn’t even have a corporate profit tax to begin with. Get rid of that tax, and poof, no more “corporate welfare”. The reason that there is a special tax rate for dividends is that they are effectively double taxed. Get rid of the profit tax, and we can make dividends part of regular income.

Count to 10 on July 7, 2011 at 2:55 PM

Not to mention that when you have the 2nd highest corporate tax rate in the G20, are one of only a handful of countries to tax overseas profits, you create an environment where you have to give breaks to keep companies here. One of the symptoms of that is lobbying, special breaks for friends, etc.

Just end corporate taxation, prices go down, people can get paid more, and corporations and their lobbies will stop spending billions to cajole lawmakers for special breaks. You get rid of a lot of corruption, increase the money in circulation and revive the economy in one fell swoop.

Will never happen, because our corporate tax structure is designed purely to force corporations to buy favor so the critters can get campaign money and jobs after they are voted out.

That reminds me–one of the reasons that it appears like the rich pay a lower tax rats than the middle class is because only half of the taxes they pay on there investments actually show up on their tax bill. The rest is the corporate profit tax that is taken out before they see any of it.

Drilling permits for the Gulf, ANWAR and California would also be helpful. Mining permits too.

rbj on July 7, 2011 at 2:49 PM

And ROYALTY payments for all the extracted mineral wealth on public lands including coal as well as natural gas, oil and hard rock metals. Royalties for timber in wilderness areas too. Not to mention tax revenues for the profits and wages coming from all this activity. Let’s mine private sector free market enterprise! Now that’s the ticket. (No Sarc here, this is what we should have done long ago.)

Why do we keep falling into the trap of equating higher (effective) tax rates with higher government revenue? It has been empirically proven that, at a certain point, increasing tax rates decreases government revenue by suppressing productive economic activity.

So, if we have a revenue problem, not a perceived fairness problem, we should look at actions that will increase government revenue. Increasing the effective tax rate (e.g. by closing “loopholes”) will, at this current time, do no such thing. Get over the idea that it will. It won’t. The only way to increase government revenue is to reduce the cost of doing business in America, which means rolling back government intrusion in the form of regulations and taxes.

Tax deductions and credits don’t affect the marginal tax rate–they just redistribute wealth.
Also, lowering marginal tax rates only increases revenues under certain conditions, and those conditions can vary over a lot of things. For instance, it is often the case that, not only do you increase tax revenue by increasing the tax revenue on the poor, but you increase their output as well, because they work just hard enough to meet set obligations. Clearly lowering a tax rate from a finite amount to nothing lowers revenue.

Cut expenditures. Pay the overdue bills, forget about that nifty new gizmo. Fire a few thousand unnecessary and grossly overpaid Federal employees, starting with the high-profile weasels like Eric “Who, Me?” Holder and moving rapidly to the entire Department of Education.

Here’s a map showing federally owned land as a percentage by state. Notice the difference between east and west. Seems this would generate a lot of revenue besides the sale price. Click on the map for a larger view.

Zero is still secretly funneling dough to a new version of ACORN and out of the other side of his mouth is telling us we have to share some sacrifice. We’ll be lucky to have gruel to share over the next year & a half.